Comments on: Blame Flies In Risky Mortgage Meltdown

Pressure Rises For Congress To Act As More Homeowners Are Unable To Meet Payments

[Renegade.Rivers]

The Federal Reserve System was established by President Woodrow Wilson in 1913. The premise used by President Wilson and his financial advisor's for the establishment of the Federal Reserve System was to "supplant the dictatorship of the private banking institutions" and "to stabilize the inflexibility of national bank note supplies". The previous system of banking was "feudal" in nature, in which private bankers control communities and could issue their own bank notes. They had little regulations concerning reserve assets and loan policies. Banking was a patch-quilt of institutions scattered across the face of the nation with no central policy.

With the advent of the Federal Reserve a new currency was issued - Federal Reserve notes, which at the time were based on the gold standard. The Federal Reserve was to unite and supervise the entire banking system, control the expansion or contraction of currency, and regulate the flow of money to the commercial banks through the establishment of 12 Federal Reserve Banks. The Federal Reserve is controlled by private banking interest and by Presidential appointment - but it is still a private organization and not a government entity.

[Renegade.Rivers]

I am sorry, but I believe that none of you have hit on the real problem here. Back in 1913 a man named Woodrow Wilson, a Democrat, maneuvered through Congress three major pieces of legislation. The first was a lower tariff, the Underwood Act; which had attached a graduated Federal income tax. Then came the passage of the Federal Reserve Act, which provided the Nation with the more elastic money supply it supposedly badly needed. Plain an simple this was a violation of the constitution. Article I, Section 8, Clause 5, of the United States Constitution provides that Congress shall have the power to coin money and regulate the value thereof and of any foreign coins. But that is not the case. The United States government has no power to issue money, control the flow of money, or to even distribute it - that belongs to a private corporation registered in the State of Delaware - the Federal Reserve Bank.

[rillifane]

"more people would not have to stretch their budgets to the breaking point just to purchase a home."
Posted by acauble1

Well they don't HAVE to stretch their budgets. But they choose to when they insist on buying more home than they really need.

The poorest quintile of Americans has significantly more living space than the average European. Anyone who has done a bit of travel knows that Americans have vastly larger homes than their economic counterparts in the industrialized world.

People can live within their means but the CHOOSE not to.

Let it be on their own heads when it all comes crashing down on them.

[totefrosch]

On the outside looking in I can see American news is vanilla ice with a wee bit of lemon.

A lot of people are losing their dream because they don't understand balloon payments.

A politicaan's talk is cheap when it comes to the average citizen. They can get voted into office again, and again, and again just by telling you what you want to hear but don't have the courage to do something.

"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." --Thomas Jefferson

[acauble1]

I've met some of the scummiest *** on the planet, and no surprise... they work in the mortgage industry! These *** will promise the sky and essentially deliver your own coffin that you end up getting into and shutting the lid yourself. Some these people make politicians and used car salesmen seem like the Pope!

We could start keeping them honest if these mortgage lenders/brokers were required (by law) to record every single phone conversation with their customer(s) from the very first one. That way, the statements they make on the phone could be cross referenced with the paperwork, and if there's any discrepancies, the lender/broker would be required (by law) to give the customer/borrower the better deal, lower rate, lower payment, whatever.

It would be great if a mortgage broker was forced to give a client a $500 discount off of a mortgage payment every month for the life of the loan, because they blatantly told the customer some BS just to get them to refinance, (or whatever)!

Sure, it would basically make the mortgage broker... well... BROKER, but after a few lose their licenses, businesses, and livelyhood due to the blatant lies they told, I'd figure the rest in the industry would quickly get the message and change their ways!

That's part of my AMERICAN DREAM!

[acauble1]

at the end of the day ... people need to be responsible for their own actions and stop living beyond their means.

Posted by bobnjersey at 01:58 AM : Mar 23, 2007


That statement says it all, essentially. However, I have to counter that by saying if the "American Dream" was more reasonably attainable for the middle class, then I'd believe that more people would not have to stretch their budgets to the breaking point just to purchase a home in a decent neighborhood with decent schools and infrastructure.

Sadly, this "great" economy is just not that generous to the majority of Americans. In this case, there is a fine line between personal financial responsibility and how far we are willing to go to give our family the best life we can possibly afford. (Or at least what we 'think' we can afford).

[bobnjersey]

[Many people place the primary responsibility for the housing bubble on Sir Alan Greedscam.]

as the title of the pieces implies ... there's likely plenty of 'blame' to go around.

consume, consume, consume. it is .. after all ... the american way. but just because someone's handing you the rope ... doesn't mean you should use it.

at the end of the day ... people need to be responsible for their own actions and stop living beyond their means.

[arthurcl1]

The Return of George Bushes Depression-Era Economics--

[alphaa10-2009]

themooniac said, "... Because the banks, oil companies, Halliburton and the super rich owned the Republican fat cat party when they were in power and are the only people that have benefitted from Bush's $hit for brains economic policy."
---

Almost completely right. But many of the Dems have had their hands where they don't belong, as well. To understand how a fresh congressman becomes corrupt, parade a group of lobbyists past his office all day. Enter the congressman, tired from fundraisers and long phone calls trying to promise (but without actually (?) promising) a laundry list of perks and privileges in legislation he works with. (see Powers that Be--2)

[alphaa10-2009]

Powers that Be-- 2
At the end of a long day, said congressman looks at check-writing lobbyists with new eyes. He tells himself, I can't stay in office without money, but these fundraisers are killing me. I have no time for the people who sent me here. Do I choose between Tyson Foods and Mrs. Someone, who lost her son in the war?

Only when federal elections are federally-financed will our congressman start serving his own constituents. Federal support provides a more equal playing field for all ideas-- not just the well-funded and well-advertised. It was Jefferson's belief and hope that good ideas in the public forum would preserve America from the evils of monarchy, class and corrupting power and wealth.

But what did Jefferson know? Today, we see that money has wormed its way into the heart of the country's political system, and will kill it unless more of us demand change. Cataclysmic political change occurs only when Powers that Be ignore the usual indicators.

[feelfree1]

Many people place the primary responsibility for the housing bubble on Sir Alan Greedscam.

Greedscam's interest rate setting policies following 9/11/01, during his tenure at the Fed, fueled the recent housing blitz to begin with, and allowed people to use their homes like a piggy-bank, with an array of refinancing opportunities. Now the pig is empty.

We are left with a crush of foreclosures, and a rapidly growing inventory of unsold homes.

If the U.S. housing bubble suffers a precipitous collapse, which seems likely, many people suggest that economic ripple will be felt around the globe.

Thanks Al.

[cfuchs2]

Now Mr Bush must be very very happy, his billionairs friends are making more and more and more money, while the working people have less money and less income, and now we can't even make a mortgage payment to have at least a decent place to live.
yeah!!!!!!! let's give it up for mr Bush he got what he wanted.
He is probably calling Cheney to ask him how many billions he made today

[themooniac]

This is the great economy that Bush speaks so often about. Strong economy my a$$. Maybe the Fed should lower interest rates period and the Congress should do their job protecting consumers from predatory lenders. Why are interest rates so high still anyway? Because the banks, oil companies, Halliburton and the super rich owned the Republican fat cat party when they were in power and are the only people that have benefitted from Bush's $hit for brains economic policy.

[alphaa10-2009]

clarkssuppor said, "This is a normal working of the markets. Let the markets adjust..."
---
Candide has found his Dr. Pangloss again, alive and well in 2007!

Perhaps it would delight clarksuppor to understand-- all in a flash of revelation-- that his own demise, itself, is no misfortune, simply Nature's way of telling him to slow down.

And surely clarksuppor has reasoned with himself that economic misfortunes of others need not concern him. Boom and bust are only "adjustments" in our Great and Wonderful System, and if only we could discipline and "educate" ourselves, we might appreciate its savage, predatory beauty for itself.

Sigh. Unfortunately, only a Darwinian economic elite is worthy of the task, as always. Economic loss and privation are but cosmic retribution to the teeming masses for their unbridled appetites for wealth, comfort and a home to call their own.

[tmr3513]

In the coming years 2 million homeowners will lose their homes through fore closer. These houses will be sold at auction at or near their "true" value(not the over inflated value the real estate industry created) to unscrupulous foreign investors from the middle east and Asia who will in turn rent them back to the poor former home owners.So goes the American dream.

[ubikvalis2]

Gee, we haven't been here before. The procedure is as follows:

1. "free market" Republicans remove as much regulation as possible in an industry.

2. Corporations in said industry go hog wild doing anything and everything to make a buck now that the regulations are gone.

3. Industry goes belly-up due to them doing anything and everything to make a buck without oversight

4. SHOCKED politicians ask "how could this have happened?"

5. Government spends billions bailing out the industry

I guess we're in phase 4.

[alphaa10-2009]

"The Return of Depression Economics", by economist Paul Krugman, analyzed 1990's economic disasters in Japan and Mexico borne on 1980's-style economic thinking-- speculation, and more speculation atop that. Such unbridled speculation, says Krugman, is the root of two major economic dislocations in the world economy, and misery for hundreds of millions.

Adding to the alarm, Paul Alexander Gusmorino III, in an insightful essay, points to a growing disparity between rich and poor as one major cause of the historic Great American Depression --- http://www.geocities.com/capitolhill/senate/6854/greatdep.html

Recent trends in this country suggest Depression-era thinking has returned to America. Greed, once again, has blinded both Wall Street and the regulators. Our stalled economy teeters on the edge of disastrous reverses.

According to Gusmorino--
"The Great Depression was the worst economic slump ever in U.S. history... Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade.
(see The Return of Depression-Era Economics-- 2)

[alphaa10-2009]

The Return of Depression-Era Economics-- 2
As Gusmorino explains, "... A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.

"... The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically. (see The Return of Depression-Era Economics-- 3)

[alphaa10-2009]

The Return of Depression-Era Economics-- 3
"Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,000. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional.
---

My comments--
Today, we see the same pattern of laws and regulators favoring a rich economic class. Yet, the meanest blue-chip CEO today would insist concentrating wealth and power in the hands of a few is simply un-American. America's greatest argument with communism, as an economic system, was the fairer distribution of wealth in this country. To the extent economic opportunity declines, we forfeit our own argument and fall prey to the same economic tyranny of which we accuse the communists.

[jimmiema]

Anybody remember the Glass Stiegal Act? After the Depression Roosevelt and congress enacted legislation that regulated the securities markets, the lending markets, the S&Ls.

Anybody remember Reagan? During the Reagan administration we began to dismantle the securities, insurance, S&Ls, utilities markets. Ken Lay was a big fan of deregulating utilities. Anybody remember Ken Lay, a good buddy of George Bush?

Anybody remember George Bush? Many of us increasingly wish we had never heard the name. Bush, chronology of regulatory neglect, gee, I think I'm beginning to wake up. It's morning in America. There are dark clouds of foreboding on the horizon.